Despite over two years of declines cash sales continue to constitute more than one-third of total home sales. CoreLogic reported today that the share of those sales diminished on a year-over-year basis for the 27th consecutive month in March, accounting for 34.6 percent of total home sales compared to 39 percent in March 2014. Cash sales were down 2.8 percentage points from February 2015.
In the years before the housing crisis cash purchases accounted for about a quarter of home sales but those purchases peaked in January 2011 at 46.5 percent. Investor transactions typically account for most of the cash sales and these have been concentrated into purchases of distressed properties. In March 56.2 percent of sales of bank owned real estate (REO) properties sold were through cash transactions as were 31.6 percent of short sales. Distressed sales, however, represent a shrinking share of all sales.
Resales now make up 80 percent of home sales and therefore have the biggest impact on the total cash share. Meanwhile sales of REO properties were only 8.4 percent of the market in March compared to 23.9 percent at the cash-sale zenith; thus the impact of those sales is also retreating.
If the cash sales share continues to fall at the same rate it did in March 2015, CoreLogic estimates cash transactions should return to their pre-crisis level of 25 percent by mid-2016.
Florida reigned at the top of cash sales in March, having the largest share of any state at 51.8 percent followed by Alabama (50 percent), New York (46.5 percent), New Mexico (42.2 percent) and Michigan (41.3 percent). Philadelphia led among large Core Based Statistical Areas (CBSAs) with a 60.7 percent share of cash sales but the remainder of the top five were all in Florida: West Palm Beach-Boca Raton (59.9 percent), Sarasota-Bradenton, (59.5 percent), Cape Coral-Fort Myers, (59.3 percent) and Miami-Miami Beach-Kendall, Fla. (58.3 percent).
Senior Director, Coldwell Banker New Homes Division
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